M&;G: geopolitical instability rewards Europe's attractiveness

It will be a good year for the real estate sector, without fireworks but with growth and stability: this is the conviction of the experts of M&G who presented today in London theGlobal Real Estate Outlook for 2026.

'European real estate is again in the crosshairs of investors,' explained Martin Towns, Global Head of Real Estate. 'New capital is coming in from Asia and the Middle East, while European capital is now being invested on the continent, partly due to the uncertain situation in the US.

What makes Europe and the UK more attractive to foreign investors are several elements: valuations have stabilised at low levels after falling over the last two years; rents continue to rise in many markets and sectors; many European countries are investing in infrastructure, security and defence under the banner of autonomy; inflation has subsided and interest rates have fallen with prospects for further adjustments, especially in the UK.

"Another factor is that there has been little construction over the past few years, so there is a big shortage of new supply, and not just in the office sector," Towns said. "The debt markets are more favourable, it is easier to borrow, so we expect capital appreciation and an increase in buying and selling this year.

The recovery will be there but it will not be spectacular, he warned, because the economic environment remains rather weak: 'For a more sustained recovery we need more convincing GDP growth, but the important thing is that we have passed the low point and are on the way up'. An interesting element of the current phase, according to the M&G experts, is that the European market offers opportunities in different sectors and for different strategies, from core to value-add to opportunistic.